Public transport infrastructure spending and provincial economic growth in South Africa: a panel auto-regressive distributed lag approach.

Abstract

This study investigates the relationship between public transport infrastructure spending and provincial economic growth in South Africa using the panel autoregressive distributed lag (ARDL) framework. Set against the backdrop of South Africa’s persistent regional economic disparities and infrastructure gaps, the research explores how transport infrastructure investments impact growth across the country’s nine provinces, each marked by distinct economic structures and historical contexts. Literature examined infrastructure impacts at the national level, this research addresses a critical gap by focusing on provincial-level dynamics in the post-apartheid era. The study employs panel data from 2008 to 2023, covering public transport infrastructure spending obtained from national allocations, provincial budgets, and state-owned enterprise investments. It examines both the direction of causality and the short and long-run relationships between infrastructure investment and economic growth. The analysis adopts a panel ARDL methodology to account for cross-sectional dependence, non-stationarity, and regional heterogeneity. The study further draws on evaluating the channels through which infrastructure impacts emerge; namely, production function effects, endogenous growth mechanisms, spatial economic shifts, network externalities, and reductions in transaction costs. Findings reveal that transport infrastructure investment produces varying economic returns across provinces, highlighting the differentiated impact of infrastructure depending on local conditions. These results provide important empirical insights for improving infrastructure allocation in a resource-constrained environment and contribute to the broader goal of addressing historical spatial inequalities and promoting inclusive, provincial balanced economic development.